Creating Shared Value (CSV) by Daiken Business

01 Contribution to carbon neutrality by utilizing wood resources

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

Daiken's strengths and value creation

By pursuing the use of wood resources for materials, turn the living space into “The second forest”

C Fix and store as carbon

CO2Forests are the carbon storage that absorbs andfixes carbon
CO2

CO2

CO2UseCO2

CO2

We conduct business activities to maximize the valueof timber and continue to use as materials for a long time.

CO2CO2CO2Lamination

The cycle toFelled trees
keep protecting
Growthand making
use of forest

Photosynthesis

CO2

becomes possible to keep storing carbon

Industrial materials business

MaturityCO2

By keep using timber as materials, itForm “The second forest” byusing timber
Carbon content that forest can store islimited. By expanding the scenes to use
timber as various materials, it will become
possible to store more carbon while enrichingpeople’s living spaces.

Strategy for Value Creation

Grow

CO2

Public spaces anliving spaces

Building materials businessHouseLogsPlant

Wood offcuts

Maximize the CO2 absorptivefunction by moderately felling trees
CO2O2

CO2

Base materials

CO2O2O2CO2O2

Timber fromforest thinning

O2CO2

Wood chips(Virgin)Young forest

Approx.

Wood chips(Recycled)

Tree age*From the frequently asked questions on the Forestry Agency’s website

Growing forest has the function to absorb
more CO2 than matured forest.
By adequately felling trees according to theforest growth cycle and newly planting trees,
it will become possible to maximize the CO2absorptive function of a forest.

Demolition
Data

Base materials

Emissions by breathing
Fixed carbon content

Tatami mats
Construction demolition
timberApprox.

121,000

t-CO2/year

DW fiberBase materials
for house flooring

Doors, cabinets, stairs, and construction materials

Woody fibers

23

Waste
incineration

Insulation board
Amount of carbon storage*

Agriculture
andhorticulture

CO2Flooring

681,000

Amount of absorption
by photosynthesis

Greening andimprovementof soilCO2

t-CO2/year

Aged forest

Amount ofabsorption/
emissions

165,000

t-CO2/year

Amount of carbon storage*

Promotion ofgreening and growth

Amount of carbon storage*Approx.

MDFO2

Emitted CO2
is absorbed
by forests

Foundation Supporting Value Creation

Building

LVL

VeneerNursery tree

Tree planting

Daiken Group's Value Creation

Social issues and needs
While the countermeasures for climate change have become a pressing global issue, the importanceof protecting and growing forests that have the functions to absorb CO2 and store it as carbon to reducegreenhouse gas emissions and using wood resources as materials, in addition to energy saving and shifting torenewable energy, has been increasing.

Daiken Corporation was founded with an eye toward the effective use of timber as precious resources and contribution tosociety. Since the foundation of the company, we have refined technologies to overcome the weaknesses of timber and use
timber with zero waste and developed industrial and building materials offering a wide variety of functions. Trees function toabsorb CO2 during the growth process, to fix it as carbon, and to keep storing it by continuing to use them as materials. Sincetimber is a renewable resource, it can contribute to the realization of a sustainable society and carbon neutrality by creating thecycle to appropriately manage and use forests. By pursuing the sustainable use of wood resources from the three perspectivesof (1) use of appropriately managed timber, (2) use of timber to protect forests, and (3) use of timber with zero waste, wecontinue to create social and economic value.

GLOW EARTH*Fiscal 2022
Calculated in accordance with the method of calculation in the“Guideline for Labeling of the Amount of Carbon Storage
Concerning Timber Used in Buildings” by the Forestry Agency

The cycle tocontinue to use as
materials for a longtime without burningthem24Creating Shared Value (CSV) by Daiken Business02 Promotion of the use of domestic timber

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

New use application development of wood materials

Promote the use of domestic timber with special MDF that offers excellent water resistanceJapan is one of the world’s most forested countries with about two-thirds of the land covered in forest.
Therefore, domestic timber should be more actively used in order to foster healthy forests that fulfill various
needs, such as absorbing CO2 and prevention of landslides. The Japanese government is aiming to increase
wood self-sufficiency to 50% by 2025.

Daiken's strengths and value creation 1

Utilization of domestic timber forflooring substrates

Cross-section image of flooring substrates
made from domestic timber

51

Fiscal 2022（%）

Approx.

60

30

Case of greening a slope surface by DW fiber

Wood culture medium
GLOW EARTH

Use case in a vegetable garden%

03 Effective utilization of unused resources

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

41
30

After about six months
Soil improvement additive
DW fiber

47

40

GLOW EARTH

33

2320
100

Expansion of the utilization of unused resources using non-combustible materials that offer excellent durability

1142015

Daiken’s special MDF
2016

2017

2018

2019

2020

20212022

Plywood made of domestic
timber(Fiscal year)

Social issues and needs
While everyday lives becoming more convenient and affluent, limited resources and energy on earth have beenheavily consumed and there have been growing concerns about the depletion of natural resources. To respond tothese issues, pursuit of sustainable production and consumption, such as effective utilization of renewable
resources and unused resources and the reduction of waste, has become crucial.

Foundation Supporting Value Creation

50

DW fiberStrategy for Value Creation

The Daiken Group took advantage of the expertise cultivated as the leading flooring manufacturer and Daiken’s unique MDF
technology that offers excellent water resistance and surface smoothness, proceeded with the development of flooring
substrates combined with domestic timber, and has made many improvements. Because of the shift, we newly promoted forour primary products in the fiscal 2022, utilization of domestic timber for flooring substrates, which was approx. 4% in the fiscal
2015, increased to approx. 51%. The group will continuously proceed with product development that will draw out the appealof domestic timber and further promote the use of domestic timber.

While exploring new possibilities of domestic timber, we developed the soil improvement additive DW fiber made of fibrillated
timber offcuts and to which fulvic acid with plant growth-promoting effects is added and the wood culture medium GLOW
EARTH that can create an optimal cultural environment by making factor substances that inhibit the growth of plants harmless
under the conceived idea of using such domestic timber as wood fibers. These products realize the resource circulation thatwood harvested in a forest becomes the culture medium, helps the growth of the next plants, and returns to the soil again anddeployment to the fields of civil engineering and landscaping as well as the fields of agricultural and horticultural materials leads
to new use application development of domestic timber.

Daiken Group's Value Creation

Daiken's strengths and value creation 3

Social issues and needs

Expanding the scenes to utilize domestic timbers with the wood hardening technology
Daiken's strengths and value creation

With Daiken’s unique WPC* technology to harden woodtissues by injecting plastics into and filling the tissues, it has
become possible to offer flooring with excellent surface
strength that uses domestic natural wood for decorative
surface materials. Because many domestic tree species aresoft materials, low durability in using them as flooring was
an issue, but by taking advantage of this technology, we will
expand the use of domestic timber while meeting the needsof using local materials.

Daiken developed DAILITE, the world’s first new industrial material using an unused resource, shirasu (volcanic ash) as themajor raw material, which has the performance that could not be realized with conventional inorganic materials, such as
lightweight, high strength, and fireproof, and started selling it in 1997. In the beginning, DAILITE was mainly used as a bearing
surface material to enhance strength of houses but we now propose to use it as the non-combustible and well-designed wallmaterials and louver materials. By finding value in an unused resource and expanding the use applications, we contribute tothe realization of a sustainable society.

Results of the commercializationof local materials with the WPCtechnology

23

Data

Daiken's strengths and value creation 2prefectures
WPC flooring

Mechanism of the WPC technology*WPC: The abbreviation for Wood Plastics Combination

Inject plastic resin into surface woodfor flooring and harden it

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DAIKEN GROUP REPORT 2022

By filling plastic resin, it demonstrates
strength against dents and scratches

Bearing cloth base materia DAILITE MU

A non-combustible wall material with a deep
curved design made of DAILITE base material
GRAVIO EDGE

Shirasu, an unused resource available in the natural world

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Expansion of the antiviral products

Creating Shared Value (CSV) by Daiken BusinessSocial issues and needs
With the pandemic outbreak of infectious disease, awareness of health and clean environments has been rapidly
increasing and the needs for sanitary measures for and safety of living spaces and public spaces where people
gather have been expanding.

04 Creating a safe, secure, healthy, and comfortable space
Initiatives for the fulfillment of materiality, “User needs in the new normal era”

Daiken's strengths and value creation 4
Creating a safe space to live together with the elderly

Daiken's strengths and value creation 1*BIOTASK: Our unique name for the antiviral function (our registered trademark)Improvement of the sound environment in living spaces

Cases of adopting the building materials
from the OMOIYARI SERIES for the living
spaces where elderly people live

A wide sliding door that can be easily
accessed by a wheelchair

Social issues and needs
With the changes of the times, issues concerning sound in daily lives have become diversified. Particularly in theCOVID-19 crisis, the needs for the prevention of sound leakage and reverberation have been rapidly increasing
because of the increase in working at home and online meetings.

Daiken's strengths and value creation 5

Creating spaces where children can spend the time safely

Daiken's strengths and value creation 2
We thoroughly examined the performance required for the area
Won the KIDS DESIGN AWARD
around a door in a childcare facility where the risk of injury is*Designs to support comfortable raising of childrenparticularly high and developed the door dedicated tokindergartens and childcare facilities, while taking advantage of theexpertise in door manufacturing cultivated from past houses andelderly facilities. We will support a wide variety of problem solutions
required for childcare facilities, such as improvement of safety andcomfort and further reduction in the nursery teachers’ burden by OMOIYARI KIDS DOOR
Ceiling sound absorbing pane KIN TONE
A door that is considerate of children’s
using Daiken’s unique technologies and diverse products.

In pursuing comfort of the living spaces, Daiken has been
engaged in acoustic products since the 1980s and faced various
sound issues. Since then, with the accumulation of technologies
and know-how for 40 years, we not only develop products having
soundproof and sound absorbing functions but also propose
spaces to realize the optimal sound environment. In response to
the fact that new issues concerning sound have recently become
apparent in offices, stores, and medical facilities, we expand theproduct lineup that corresponds to the needs of each facility. A soundproof room corresponding toplaying a musical instrument
Through the resolution of sound issues that significantly influence
comfort, we will realize more comfortable living spaces.

OTOTEN, a ceiling material for a soundproof room

05 Development of labor saving type products and techniques
Initiatives for the fulfillment of materiality, “User needs in the new normal era”

Foundation Supporting Value Creation

Social issues and needs
With the increase in women’s participation in society and in childcare facilities that increasingly grow inimportance, it is imperative to create safer facilities and reduce nursery teachers’ burden in addition to theproblem of children on the waiting list due to the lack of facilities.

Strategy for Value Creation

Based on our ideas and technologies for living spaces proventhrough our work, Daiken is committed to manufacturing fromthe perspective of all users, including elderly people, their families,and caregivers. In recent years, we have improved themechanism that can finely respond to the needs that vary
according to facilities, such as elderly facilities and houses thatare considerate of home care, and have been deploying
comprehensive product lines that are safe and have functionality.

Microorganism measurement room in the R&D
CenterDaiken Group's Value Creation

Social issues and needs
Japanese society is more rapidly aging than other developed countries and becoming a super-aging society with
one in four people aged 65 or over. Amid concerns about social problems with elderly people providing care for
elderly people, living spaces where people can live with peace of mind even when they get older are required.

We focused on the antiviral function in the wake of the outbreak of
the novel influenza in 2009 and started working on itsdevelopment in 2011. In the following year, we put the function topractical use as the antiviral function BIOTASK* ahead of theindustry. We respond to the needs in the COVID-19 crisis, expand
the product variations having the antiviral function, and proceedwith the initiatives aimed at reviewing the antivirus mechanism andA product having the antiviral function
contributing to the reduction of the threat of virus.

safetyContributing to the anti-seismic ceiling by developing the labor-saving construction techniqueSocial issues and needs
Japan has been devastated by earthquakes many times, including the Great East Japan Earthquake. Largeearthquakes, such as the Nankai trough earthquake, are predicted with high probability to occur in the future, and theJapanese government has set a target for seismic resistance ratios and promotes the seismic resistance and thestrengthening of disaster prevention for houses and buildings.

Social issues and needs
A shortage of workers has become an aggravated problem in the construction industry. On the other hand, while theBuilding Standards Act revised after the Great East Japan Earthquake requires higher aseismic performance of the ceilingsof large public buildings, there was an issue that it requires much time and labor in making existing ceiling anti-seismic.

Daiken's strengths and value creation 3

Daiken's strengths and value creation

Daiken has contributed to improving the aseismic performance ofJapanese wooden houses through the development of DAILITE,
an inorganic bearing surface using mineral fibers and an unused
resource, shirasu (volcanic ash) as the major raw materials. By
deploying not only bearing surface materials but also a number of
product lineups that offer excellent non-combustibility andfireproof property, we have been promoting the strengthening ofdisaster prevention. With our unique base materials, we will
improve safety of various living spaces, such as wooden houses
and public and commercial buildings.
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DAIKEN GROUP REPORT 2022

Number of households installing DAILITE(cumulative) *Estimated by our company
Approx.

1,000,000(As of the end of March 2022)

960,000
Approx.

(As of the end of March 2021)

DAILITE MS

To particularly respond to the needs of making the ceilings of large
public facilities anti-seismic after the Great East Japan Earthquake,
Daiken developed a unique ceiling construction technique that makes it
possible to make the ceiling anti-seismic with the saving construction
time and work. With this construction technique, we reduced theconstruction time and labor by approx. 25% compared to making theconventional ceiling anti-seismic. We also developed a ceiling system
exclusively for hallways, which will become the evacuation route at thetime of disaster. We will aim to further realize the saving construction
time and work for not only ceilings but also building materials forrenovation from the perspective of a new construction technique.

Data

Seismic resistance / Strengthening of disaster prevention

Rate of reduction of construction
time and labor compared tomaking the conventional ceiling
anti-seismic:

25*Estimated by our company

Approx.

%Our own anti-seismic ceiling construction
technique

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